Forex
DXY Bulls Face Overbought Risks Amid Crude Oil Decline
The USD/JPY and DXY are showing signs of bullish rebound, but overbought momentum readings increase the risk of a near-term reversal. Despite mounting geopolitical risks, crude oil prices have declined more than 10% from their monthly highs.
On the daily time frame, the DXY's bullish rebound from the 98.50 support level is currently retesting the 2026 uptrend from below near 100.50. However, daily momentum is becoming overbought, similar to readings observed near previous yearly highs.
The drawdown in crude may reflect market expectations of near-term resolutions, alongside increased Saudi Gulf exports following the disruption to the East-West pipeline.